Cutting tax for companies that join a tourism promotional programme 2015.

Vietnam’s Ministry of Culture, Sports and Tourism wants the country to cut VAT in half and exempt or cut corporate income tax by 50% for companies that join a tourism promotional programme planed for 2015.

Saigon Times claimed the ministry made the proposal to encourage local tourism firms to joinn a promotional programme to increase competitiveness.

Operating costs for travel related companies and hotels are higher in Vietnam due to taxation.

However, the proposed cuts in VAT and corporate tax would only apply to companies that join a proposed national tourism campaign. They would have to contribute to the overall cost of the promotions, while enjoying a partial tax holiday in return.

Besides tax holidays, the ministry has asked the government to speed up infrastructure projects and increase security for tourists to ensure the country’s image as a safe destination improves and stands out from its neighbours that are suffering safety set backs.

According the local daily newspaper, the ministry plans to implement the national tourism promotion programme “later this year”, but with just two months left to organise the campaign and find funding, it is more likely that the campaign with begin in early 2015.

According to a travel firm, the current corporate income tax rate applicable to the tourism sector is 22%.

The government offered similar tax reductions in 2009 for the companies joining a national travel promotion programme entitled “Impressive Vietnam”, when VAT was cut by half and corporate income tax payments delayed for nine months.

During January to September this year, tourist arrivals to Vietnam reached 6.06 million visits increasing 10.4% year-on-year while domestic tourists recorded 32.4 million trips up 7.6% year-on-year.

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